Can you put your timeshare on a bankruptcy?

Answer 1

I know that in California you can protect it when filing Chapter 7.

I believe the above is entirely incorrect.

First - BK is done under Federal Laws in a FEDERAL COURT, and while there may be some options because of the state, they are generally minor and more to conform things to the local custom than anything.

Second - BK effects and includes just about everything you own and everything you owe. You do not pick and chose. Some things may be excluded from discharge (like child support or court fines), and others exempt from use (like personal items, retirement accounts), but everything is included. The exemptions are really for items of "need", like a reasonable car (actually under $500, but courts generally just use reasonable), so you can work (as long as a loan isn't secured by the car)....things like that.

I can't possibly see how a time share could qualify as anything but a luxury and allowing a debtor to keep it, if it has any value, while creditors go unpaid would seem not only contrary to the ideal of BK, but grossly unfair.

However, Timeshares frequently have no realizable value, many times people that bought them basically have to pay to get rid of them and out of paying any more fees.....as such the creditors may not be interested in them. However, that very fact, that they are not good financial investments, frequently costly to maintain, etc...is a very good reason to using BK to get out of any future obligation to pay for them...especially as if your going BK, a complete reassessment of your lifestyle and how you can afford it is in order.

update 2/24/2010:

In California, you are allowed to keep timeshares under local exemption rule §703.140(b)(5)-- the "wildcard" exemption. This is a $20,825 umbrella designed to protect a debtor's assets in Chapter 7 bankruptcy cases as long as assets protected under the wildcard meet certain conditions; either that is is equity in the debtor's residence or it is personal personal property.

Though timeshares are technically considered real property and thus does not fit under either conditions required for the wildcard exemption, local bankruptcy rules specifically dictate that timeshares, should they have any value, may be exempted under the wildcard, as long as all assets including the timeshare exempted under wildcard do not exceed $20,825 in value.

I believe it's a different debate entirely as to whether a debtor should be allowed to continue to make payments on a timeshare through a pending chapter 7 bankruptcy, as these are funds that might otherwise be paid to other creditors in a chapter 13. I suppose it depends on the trustee assigned to the case, as I have seen many chapter 7 cases receive discharge while debtors were paying for timeshares.

-ap

Answer 2

Not only can you you must do so. But you must do so with everything.

Basically, bankruptcy uses all your assets to pay all your debts.

Any loan to get the timeshare is a debt.

The timeshare itself is an asset.

You MUST include all of your debts and all of your assets in the filing. You do not and cannot pick and chose what is involved. All are given priorities, some of each may be exempt from seizure or discharge.

You really didn't think you could just go BK on something, have the debt discharged and simply keep everything else you want, did you?

Yes, I agree that along with your other assets, you can use your timeshare to pay all your debts.

Certainly, timeshares are treated like any other properties. Therefore, it is an asset that you can include in filing for bankruptcy.

Answer 3

It must be.

EVERYTHING you owe and EVERYTHING you own is included in the BK. They are given different priorities by the Court (some of either may be exempt)....but you do not pick and chose what you include. Basically all of your assets are used to pay your debts.

You will be swearing, in writing, to including everything and honestly providing info on your entire financial status to the court. Not doing so can be interpreted as criminal fraud...to a judge/court...not something taken lightly.

Answer 4

Its not can you, its you absolutely have to. First off...BK is a Federal matter...while some States have some rules that you may elect to have apply in the Federal District courts of that region, they are fairly minor and are really to make definitions used locally adhere to the process. (Like if an interest in a time share is considered real or personal property). ALL debts and ALL assets MUST be included in your BK filing. You cannot pick and chose what is included. Your entire financial obligations and assets are involved. You go BK, not a debt or obligation. Each type of obligation or asset are given different priorities (or status) of payment, with assets being used to pay obligations. Some assets and some debts may be exempt from seizure or discharge, but they are included and given that status. That basically becomes a court decision. Not disclosing everything on your filing not only will get the case dismissed, but can subject you to fraud charges.